Here Come the Layoffs

It wasn’t hard – I knew mortgage origination forecasts were being slashed going into the year, with refinance volume expected to fall from $1.2 trillion last year to $785 billion in 2013, per the MBA.

Meanwhile, purchase-money mortgage volume was only slated to rise from $503 billion to $585 billion, probably not enough to add many new positions, or offset the fallout in the refinance department.

With volume predicted to be well off recent levels, it didn’t take a genius.

And seeing that rates have increased a lot more than projected, those numbers may turn out to be even worse. For the record, I was wrong about mortgage rates. I expected sideways movement for much of the year. I concede.

Anyway, the mortgage layoffs have already begun, with Wells Fargo announcing late last week that it was cutting 350 employees nationwide as a result of higher home loan rates.

Wells Fargo spokesperson Angie Kaipust said increased demand during the low interest rate environment enjoyed over the past few years meant it could “staff up,” but now that rates are a bit more realistic, headcount must align.

The San Francisco-based bank plans to cut jobs in a number of cities, including Des Moines and Minneapolis.

Then there’s Citi, which reportedly opened a sales facility in Danville, Illinois after demand for mortgage refinances surged. Sadly, the unit is being shuttered, and roughly 120 employees will be laid off.

These are but two examples. Many smaller shops are probably slashing their workforces as well, though such news won’t make the headlines.

2014 Mortgage Origination Forecasts Point to Even Fewer Jobs

The outlook isn’t exactly bright for 2014 either, according to the latest housing forecast from Fannie Mae, so expect more heads to roll as volume continues to dwindle.

Yesterday, the GSE noted that residential lenders are expected to originate just $1.07 trillion in loan volume in 2014, down from $1.65 trillion this year, and about half the $2.03 trillion seen in 2012.

The refinance share, which was 73% in 2012, is expected to fall to 62% this year, and to just 31% in 2014. Only the advent of HARP 3 could make a meaningful impact at this point, and it doesn’t seem likely now.

Fannie expects purchase activity to rise from $619 billion this year to $741 billion in 2014, while refinance activity is forecast to plummet from just over $1 trillion to $331 billion.

Clearly few loan officers will be needed to handle that sharp drop in demand.

Update: It’s starting to feel like 2007 all over again – I’m receiving tips again about branch closures and layoffs. The latest being, “Residential Finance of Columbus Ohio hacked 19 branches yesterday and a regional manager.”

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 13 years.

5 Comments

AC LawrenceJuly 31, 2013 at 8:11 am -

Ocwen is trying it’s hardest to make your layoff forecasts come true, at least as it pertains to MLS. I think that origination employment is likely to see some increase. It’s highly improbable that the current amount of vacant foreclosures with the added in new building will allow for new lending not to improve upon the preivous year.

Colin RobertsonJuly 31, 2013 at 5:11 pm -

Loan servicers are certainly shedding employees as a result of all the M&A activity and reduced loss mitigation workload. As for originators, I don’t see how the workforce increases if lending estimates are slated to be significantly lower, unless they all get a much smaller share of the pie.

jeffSeptember 28, 2013 at 11:40 am -

I seem to see an increase in Wholesale Account Executive job postings. Do you think there is a trend to bring more reps into the industry? I tend to remember a lot more back in the early 2000’s especially with all the subprime

Colin RobertsonSeptember 29, 2013 at 10:06 am -

I’m sure lenders are always happy to bring in more sales staff, seeing that they tend to get paid only for production. More warm bodies making phone calls means more profit, regardless of whether there are fewer loans out there nowadays.

RamonApril 17, 2014 at 2:43 pm -

The banks should find new jobs for these people that they hired to make tons of $$$$ off the short-lived refi boom.